Television and Media

06 Aug If You Need to File Chapter 7, Don’t File Chapter 13

choosing the right bankruptcy chapterYou might not think that a visit to a dry cleaner would give rise to insight about Chapter 7 and Chapter 13, but I was reminded of several very relevant issues while chatting with the two women who worked behind the counter. I have been a customer of this laundry service for several years and the staff people know that I am a bankruptcy lawyer. While waiting for my order, one of the counter clerks mentioned that she was currently in a Chapter 13, but that she was trying to dismiss it because she could not afford the payment She stated that she had filed her case because she had overwhelming debt and that her attorney “had given me one price, but three weeks later, the price went way up.” Further, she called the attorney to ask him to “cancel my case” but the attorney said that it would take three days to process a dismissal. She wanted to dismiss to avoid another payroll deduction. I asked her if she was trying to protect a car or a house by filing Chapter 13, and she replied that she was not - she filed Chapter 13 because her attorney advertised that she could “start bankruptcy protection” for less than $100 and she did not have the $1,300 it would have cost to file Chapter 7.
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19 Jun Forbes Columnist Again Shows Ignorance About Chapter 7 Bankruptcy

Forbes Magazine columnist gets bankruptcy wrong...againEarlier this month, I posted a rebuttal to a Forbes online article written by a tax lawyer named Stephen Dunn. Mr. Dunn opines that usually Chapter 7 is not the best option for debtors facing severe financial hardship.

Noted consumer advocate Gerri Detweiler saw my Bankruptcy Law Network post and invited me to guest post a rebuttal for publication on Forbes online. My colleagues in the Bankruptcy Law Network contributed to this guest post and together we demonstrated the flaws in Mr. Dunn’s arguments - point by point. Now, to quote Ronald Reagan - “there you go again!”
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04 Jun Another Ivory Tower Intellectual Gets Consumer Bankruptcy Wrong

improper analysisThis week's Forbes magazine contains an editorial by tax lawyer Steven J. Dunn entitled "Consumer Bankruptcies do More Harm than Good." Mr. Dunn acknowledges that he is not a bankruptcy lawyer (although he knows a few bankruptcy lawyers - including his son, who once represented a bank in a lawsuit against the president of a company who signed a personal guarantee). Mr. Dunn then proceeds to discuss his concerns with Chapter 7 (which he mislabels "consumer bankruptcy" - and he thereafter ignores Chapter 13 relief, which is, of course, another type of "consumer" bankruptcy).
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24 Dec Bankruptcy Basics: Bankruptcy Fraud can lead to Truth or Consequences

In earlier posts, two bankruptcies filed by debtors appearing in Bravo Television reality shows were discussed. Terese Giudice who appears on Real Housewives of New Jersey and Sonja Morgan who appears on Real Housewives of New York City each filed banruptcy. Ms. Giudice filed a chapter 7 bankruptcy (consumer bankruptcy); Ms. Morgan filed a Chapter 11 bankruptcy (for high income consumers or bigger businesses). My opinion was that Ms. Morgan chose wisely and that perhaps Ms. Giudice had not. The events since the filing demonstrate the importance of filing accurate and thoroughly complete schedules. On June 30, 2010, the Chapter 7 Trustee filed an adversary proceeding, objecting to the discharge of debts for the Giudices. The Chapter 7 trustee alleges that assets were concealed or withheld by the debtors and that as a consequence, their debts should not be discharged. On August 3, 2010, the Giudices answered the lawsuit, denying that they had concealed any property or withheld any information from the court. On September 2, 2010, the United States Trustee filed an adversary proceeding in the Guidici case in New Jersey.
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19 Jun Debt Settlement Companies Come Under Increasing Scrutiny from Regulators

The lead article in the Economy section of the June 18, 2010 New York Times offers revealing insight into the practices of "debt settlement" companies. Debt settlement companies position themselves as alternatives to bankruptcy, suggesting that they have insight into "secrets that the credit card companies don't want you to know." In fact, the business models used by debt settlement vendors is fairly simple. As the Times article explains:
In the typical arrangement, the companies direct consumers to set up special accounts and stock them with monthly deposits while skipping their credit card payments. Once balances reach sufficient size, negotiators strike lump-sum settlements with credit card companies that can cut debts in half. The programs generally last two to three years.
The problem, however is this:
What they don’t tell their customers is when you stop sending the money, creditors get angry,” said Andrew G. Pizor, a staff lawyer at the National Consumer Law Center. “Collection agents call. Sometimes they sue. People think they’re settling their problems and getting some relief, and lo and behold they get slammed with a lawsuit.
Further, "the industry’s own figures show that clients typically fail to secure relief. In a survey of its members, the Association of Settlement Companies found that three years after enrolling, only 34 percent of customers had either completed programs or were still saving for settlements. According to one debt settlement executive quoted by the Times, the entire industry is like a "Ponzi scheme."
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